Invoking Admiralty Jurisdiction Over Foreign Non-Admiralty Awards
Invoking Admiralty Jurisdiction Over Foreign Non-Admiralty Awards
By: Kevin Phillips
Edited by: Tiffany Morales
D’Amico Dry Limited v. Primera Maritime (Hellas) Limited, 11-3473-CV, 2014 WL 2609648 (2d Cir. June 12, 2014)
The controversy in D’Amico Dry Limited v. Primera Maritime concerns invoking admiralty jurisdiction in Federal courts to enforce foreign awards resulting from disputes that the foreign courts did not consider to be maritime in nature. The underlying dispute was heard in England at the High Court of Justice, Queen’s Bench Division, commercial sub-division. The dispute concerned a forward freight agreement (FFA), which is a futures contract by which Plaintiff D’Amico was able to hedge against a drop in rates for shipping goods.Under English law these contracts are not maritime in nature. The rates for shipping goods fell between the time the FFA was made and the dates for shipping, resulting in an obligation on Defendant Primera to pay the difference between the current rate and the contract rate. They failed to do so. Per the FFA, the dispute was taken to the English courts whose commercial division found that Primera must pay the difference in the rates. Thereafter, this judgment was taken for enforcement to the Southern District of New York who found that it did not have jurisdiction to enforce the judgment. The district court found admiralty jurisdiction to be lacking because the English court did not find the dispute to be maritime in nature. On appeal the Second Circuit remanded the case holding, “that, under § 1333, United States courts have jurisdiction to enforce a judgment of a foreign non?admiralty court if the claim underlying that judgment wouldbe deemed maritime under the standards of U.S. law.”The Second Circuit turned to Penhallow v. Doane’s Administrators, 3 U.S. (3 Dall.) 54 (1795), to show that “since the birth of the nation” one could invoke admiralty jurisdiction to enforce an award by showing that the award was issued by a foreign admiralty court. The court followed Vitol, S.A. v. Primerose Shipping Co., 708 F.3d 527 (4th Cir. 2013), which in turn was expounding on dicta from Victrix S.S. Co. v. Salen Dry Cargo A.B., 825 F.2d 709(2d Cir. 1987), to find that the term foreign admiralty court meant a court hearing a maritime dispute. That a court was not technically sitting in admiralty jurisdiction was not relevant as long as the dispute is maritime in nature. The court found this to be consistent with the policy found in Penhallow which is to keep maritime disputes in admiralty courts, to promote international trade and comity, and to distribute power between Federal and State courts according to the Constitution. The Second Circuit found that “[t]hese policies all relate far more to the maritime character of the underlying dispute than to the classification of the court that rendered the judgment.”The Second Circuit then turned its attention to the crux of the problem, that is, which country’s laws would determine if the underlying dispute was maritime in nature. The district court found that the foreign country’s laws would determine the nature of the dispute. The Second Circuit disagreed. The district court had drawn an analogy with the enforcement of foreign settlements, which are never maritime in nature. The Second Circuit found that settlements are not analogous to judicial awards due to the lack of substantial court proceedings, and therefore there is no precedent for either side in this specific area as this is the first time the question has been asked.On this novel issue, the Second Circuit ruled that U.S. laws are to determine if the underlying dispute is maritime in nature. The court found numerous reasons for this determination. The first reason is that the court found that “[i]t seems reasonable to assume that the Framers of the Constitution and Congress wanted to ensure that matters deemed maritime under our laws have access to our federal courts.” Second, the court found that choice of law principles favored using the forum state’s laws for jurisdictional questions. Third, comity favors the enforcement of awards and this ruling provides such enforcement. Fourth, foreign classification of disputes should not affect how the U.S. classifies its disputes. Lastly, subject matter jurisdiction disputes ought to be answered in the least complicated way possible. To look to foreign laws to decide subject matter jurisdiction would be more complicated than looking to domestic laws. Therefore, domestic laws ought to control jurisdiction.
